Micro-family-owned business : transitory survival mechanism or long term wealth creator?

Principal Topic: Entrepreneurship is key to employment, innovation and growth (Acs & Mueller, 2008), and as such, has been the subject of tremendous research in both the economic and management literatures since Solow (1957), Schumpeter (1934, 1943), and Penrose (1959). The presence of entrepreneurs in the economy is a key factor in the success or failure of countries to grow (Audretsch and Thurik, 2001; Dejardin, 2001). Further studies focus on the conditions of existence of entrepreneurship, influential factors invoked are historical, cultural, social, institutional, or purely economic (North, 1997; Thurik 1996 & 1999). Of particular interest, beyond the reasons behind the existence of entrepreneurship, are entrepreneurial survival and good ''performance'' factors. Using cross-country firm data analysis, La Porta & Schleifer (2008) confirm that informal micro-businesses provide on average half of all economic activity in developing countries. They find that these are utterly unproductive compared to formal firms, and conclude that the informal sector serves as a social security net ''keep[ing] millions of people alive, but disappearing over time'' (abstract). Robison (1986), Hill (1996, 1997) posit that the Indonesian government under Suharto always pointed to the lack of indigenous entrepreneurship , thereby motivating the nationalisation of all industries. Furthermore, the same literature also points to the fact that small businesses were mostly left out of development programmes because they were supposed less productive and having less productivity potential than larger ones. Vial (2008) challenges this view and shows that small firms represent about 70% of firms, 12% of total output, but contribute to 25% of total factor productivity growth on average over the period 1975-94 in the industrial sector (Table 10, p.316). ---------- Methodology/Key Propositions: A review of the empirical literature points at several under-researched questions. Firstly, we assess whether there is, evidence of small family-business entrepreneurship in Indonesia. Secondly, we examine and present the characteristics of these enterprises, along with the size of the sector, and its dynamics. Thirdly, we study whether these enterprises underperform compared to the larger scale industrial sector, as it is suggested in the literature. We reconsider performance measurements for micro-family owned businesses. We suggest that, beside productivity measures, performance could be appraised by both the survival probability of the firm, and by the amount of household assets formation. We compare micro-family-owned and larger industrial firms' survival probabilities after the 1997 crisis, their capital productivity, then compare household assets of families involved in business with those who do not. Finally, we examine human and social capital as moderators of enterprises' performance. In particular, we assess whether a higher level of education and community participation have an effect on the likelihood of running a family business, and whether it has an impact on households' assets level. We use the IFLS database compiled and published by RAND Corporation. The data is a rich community, households, and individuals panel dataset in four waves: 1993, 1997, 2000, 2007. We now focus on the waves 1997 and 2000 in order to investigate entrepreneurship behaviours in turbulent times, i.e. the 1997 Asian crisis. We use aggregate individual data, and focus on households data in order to study micro-family-owned businesses. IFLS data covers roughly 7,600 households in 1997 and over 10,000 households in 2000, with about 95% of 1997 households re-interviewed in 2000. Households were interviewed in 13 of the 27 provinces as defined before 2001. Those 13 provinces were targeted because accounting for 83% of the population. A full description of the data is provided in Frankenberg and Thomas (2000), and Strauss et alii (2004). We deflate all monetary values in Rupiah with the World Development Indicators Consumer Price Index base 100 in 2000. ---------- Results and Implications: We find that in Indonesia, entrepreneurship is widespread and two thirds of households hold one or several family businesses. In rural areas, in 2000, 75% of households run one or several businesses. The proportion of households holding both a farm and a non farm business is higher in rural areas, underlining the reliance of rural households on self-employment, especially after the crisis. Those businesses come in various sizes from very small to larger ones. The median business production value represents less than the annual national minimum wage. Figures show that at least 75% of farm businesses produce less than the annual minimum wage, with non farm businesses being more numerous to produce the minimum wage. However, this is only one part of the story, as production is not the only ''output'' or effect of the business. We show that the survival rate of those businesses ranks between 70 and 82% after the 1997 crisis, which contrasts with the 67% survival rate for the formal industrial sector (Ter Wengel & Rodriguez, 2006). Micro Family Owned Businesses might be relatively small in terms of production, they also provide stability in times of crisis. For those businesses that provide business assets figures, we show that capital productivity is fairly high, with rates that are ten times higher for non farm businesses. Results show that households running a business have larger family assets, and households are better off in urban areas. We run a panel logit model in order to test the effect of human and social capital on the existence of businesses among households. We find that non farm businesses are more likely to appear in households with higher human and social capital situated in urban areas. Farm businesses are more likely to appear in lower human capital and rural contexts, while still being supported by community participation. The estimation of our panel data model confirm that households are more likely to have higher family assets if situated in urban area, the higher the education level, the larger the assets, and running a business increase the likelihood of having larger assets. This is especially true for non farm businesses that have a clearly larger and more significant effect on assets than farm businesses. Finally, social capital in the form of community participation also has a positive effect on assets. Those results confirm the existence of a strong entrepreneurship culture among Indonesian households. Investigating survival rates also shows that those businesses are quite stable, even in the face of a violent crisis such as the 1997 one, and as a result, can provide a safety net. Finally, considering household assets - the returns of business to the household, rather than profit or productivity - the returns of business to itself, shows that households running a business are better off. While we demonstrate that uman and social capital are key to business existence, survival and performance, those results open avenues for further research regarding the factors that could hamper growth of those businesses in terms of output and employment.

Bootstrap approaches for estimation and confidence intervals of long term memory processes

In this work, we investigate an alternative bootstrap approach based on a result of Ramsey [F.L. Ramsey, Characterization of the partial autocorrelation function, Ann. Statist. 2 (1974), pp. 1296-1301] and on the Durbin-Levinson algorithm to obtain a surrogate series from linear Gaussian processes with long range dependence. We compare this bootstrap method with other existing procedures in a wide Monte Carlo experiment by estimating, parametrically and semi-parametrically, the memory parameter d. We consider Gaussian and non-Gaussian processes to prove the robustness of the method to deviations from normality. The approach is also useful to estimate confidence intervals for the memory parameter d by improving the coverage level of the interval.

Estimating short and long-term residential demand for electricity : new evidence from Sri Lanka

This study investigates the short-run dynamics and long-run equilibrium relationship between residential electricity demand and factors influencing demand - per capita income, price of electricity, price of kerosene oil and price of liquefied petroleum gas - using annual data for Sri Lanka for the period, 1960-2007. The study uses unit root, cointegration and error-correction models. The long-run demand elasticities of income, own price and price of kerosene oil (substitute) were estimated to be 0.78, - 0.62, and 0.14 respectively. The short-run elasticities for the same variables were estimated to be 032, - 0.16 and 0.10 respectively. Liquefied petroleum (LP) gas is a substitute for electricity only in the short-run with an elasticity 0.09. The main findings of the paper support the following (1) increasing the price of electricity is not the most effective tool to reduce electricity consumption (2) existing subsidies on electricity consumption can be removed without reducing government revenue (3) the long-run income elasticity of demand shows that any future increase in household incomes is likely to significantly increase the demand for electricity and(4) any power generation plans which consider only current per capita consumption and population growth should be revised taking into account the potential future income increases in order to avoid power shortages ill the country.

Framework for the long-term operation of a mobile robot via the Internet

This paper describes an autonomous docking system and web interface that allows long-term unaided use of a sophisticated robot by untrained web users. These systems have been applied to the biologically inspired RatSLAM system as a foundation for testing both its long-term stability and its practicality. While docking and web interface systems already exist, this system allows for a significantly larger margin of error in docking accuracy due to the mechanical design, thereby increasing robustness against navigational errors. Also a standard vision sensor is used for both long-range and short-range docking, compared to the many systems that require both omni-directional cameras and high resolution Laser range finders for navigation. The web interface has been designed to accommodate the significant delays experienced on the Internet, and to facilitate the non- Cartesian operation of the RatSLAM system.

Springbrook : Challenges in developing a long-term, rainforest wireless sensor network

We describe the design, development and learnings from the first phase of a rainforest ecological sensor network at Springbrook - part of a World Heritage precinct in South East Queensland. This first phase is part of a major initiative to develop the capability to provide reliable, long-term monitoring of rainforest ecosystems. We focus in particular on our analysis around energy and communication challenges which need to be solved to allow for reliable, long-term deployments in these types of environments.

Optimising figure of merit for phonetic spoken term detection

This paper introduces a novel technique to directly optimise the Figure of Merit (FOM) for phonetic spoken term detection. The FOM is a popular measure of sTD accuracy, making it an ideal candiate for use as an objective function. A simple linear model is introduced to transform the phone log-posterior probabilities output by a phe classifier to produce enhanced log-posterior features that are more suitable for the STD task. Direct optimisation of the FOM is then performed by training the parameters of this model using a non-linear gradient descent algorithm. Substantial FOM improvements of 11% relative are achieved on held-out evaluation data, demonstrating the generalisability of the approach.

Acute and long-term effects of exercise on appetite control: Is there any benefit for weight control?

Purpose of review: To examine the relationship between energy intake, appetite control and exercise, with particular reference to longer term exercise studies. This approach is necessary when exploring the benefits of exercise for weight control, as changes in body weight and energy intake are variable and reflect diversity in weight loss. Recent findings: Recent evidence indicates that longer term exercise is characterized by a highly variable response in eating behaviour. Individuals display susceptibility or resistance to exercise-induced weight loss, with changes in energy intake playing a key role in determining the degree of weight loss achieved. Marked differences in hunger and energy intake exist between those who are capable of tolerating periods of exercise-induced energy deficit, and those who are not. Exercise-induced weight loss can increase the orexigenic drive in the fasted state, but for some this is offset by improved postprandial satiety signalling. Summary: The biological and behavioural responses to acute and long-term exercise are highly variable, and these responses interact to determine the propensity for weight change. For some people, long-term exercise stimulates compensatory increases in energy intake that attenuate weight loss. However, favourable changes in body composition and health markers still exist in the absence of weight loss. The physiological mechanisms that confer susceptibility to compensatory overconsumption still need to be determined.

Low fat loss response after medium-term supervised exercise in obese is associated with exercise-induced increase in food reward

Objective: To examine exercise-induced changes in the reward value of food during medium-term supervised exercise in obese individuals. ---------- Subjects/Methods: The study was a 12-week supervised exercise intervention prescribed to expend 500 kcal/day, 5 d/week. 34 sedentary obese males and females were identified as responders (R) or non-responders (NR) to the intervention according to changes in body composition relative to measured energy expended during exercise. Food reward (ratings of liking and wanting, and relative preference by forced choice pairs) for an array of food images was assessed before and after an acute exercise bout. ---------- Results. 20 responders and 14 non-responders were identified. R lost 5.2 kg±2.4 of total fat mass and NR lost 1.7 kg±1.4. After acute exercise, liking for all foods increased in NR compared to no change in R. Furthermore, NR showed an increase in wanting and relative preference for high-fat sweet foods. These differences were independent of 12-weeks regular exercise and weight loss. ---------- Conclusion. Individuals who showed an immediate post-exercise increase in liking and increased wanting and preference for high-fat sweet foods displayed a smaller reduction in fat mass with exercise. For some individuals, exercise increases the reward value of food and diminishes the impact of exercise on fat loss.